2-41
32.
The financial statements for Goodwin, Inc. and Corr Company for the year ended
December 31, 2013, prior to Goodwin’s acquisition business combination transaction
regarding Corr, follow (in thousands):
On December 31, 2013, Goodwin issued $600 in debt and 30 shares of its $10 par value
common stock to the owners of Corr to acquire all of the outstanding shares of that
company. Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock
issuance costs. Corr‘s equipment was actually worth $1,400 but its buildings were only
valued at $560.
Compute the consolidated revenues for 2013.
A.
$2,700.
B.
$720.
C.
$920.
D.
$3,300.
E.
$1,540.
$2,700 Parent’s Revenue Only
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
33.
The financial statements for Goodwin, Inc. and Corr Company for the year ended
December 31, 2013, prior to Goodwin’s acquisition business combination transaction
regarding Corr, follow (in thousands):
On December 31, 2013, Goodwin issued $600 in debt and 30 shares of its $10 par value
common stock to the owners of Corr to acquire all of the outstanding shares of that
company. Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock
issuance costs. Corr’s equipment was actually worth $1,400 but its buildings were only
valued at $560.
Compute the consolidated receivables and inventory for 2013.
A.
$1,200.
B.
$1,515.
C.
$1,540.
D.
$1,800.
E.
$2,140.
$1,200 + $340 = $1,540
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
34.
The financial statements for Goodwin, Inc. and Corr Company for the year ended
December 31, 2013, prior to Goodwin’s acquisition business combination transaction
regarding Corr, follow (in thousands):
On December 31, 2013, Goodwin issued $600 in debt and 30 shares of its $10 par value
common stock to the owners of Corr to acquire all of the outstanding shares of that
company. Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock
issuance costs. Corr’s equipment was actually worth $1,400 but its buildings were only
valued at $560.
Compute the consolidated expenses for 2013.
A.
$1,980.
B.
$2,005.
C.
$2,040.
D.
$2,380.
E.
$2,405.
$1,980 + $25 Fees = $2,005
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
35.
The financial statements for Goodwin, Inc. and Corr Company for the year ended
December 31, 2013, prior to Goodwin’s acquisition business combination transaction
regarding Corr, follow (in thousands):
On December 31, 2013, Goodwin issued $600 in debt and 30 shares of its $10 par value
common stock to the owners of Corr to acquire all of the outstanding shares of that
company. Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock
issuance costs. Corr’s equipment was actually worth $1,400 but its buildings were only
valued at $560.
Compute the consolidated cash account at December 31, 2013.
A.
$460.
B.
$425.
C.
$400.
D.
$435.
E.
$240.
$240 + $220 = $460 – ($25 + $35) = $400
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
36.
The financial statements for Goodwin, Inc. and Corr Company for the year ended
December 31, 2013, prior to Goodwin’s acquisition business combination transaction
regarding Corr, follow (in thousands):
On December 31, 2013, Goodwin issued $600 in debt and 30 shares of its $10 par value
common stock to the owners of Corr to acquire all of the outstanding shares of that
company. Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock
issuance costs. Corr’s equipment was actually worth $1,400 but its buildings were only
valued at $560.
Compute the consolidated buildings (net) account at December 31, 2013.
A.
$2,700.
B.
$3,370.
C.
$3,300.
D.
$3,260.
E.
$3,340.
$2,700 BV + $560 FV = $3,260
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
37.
The financial statements for Goodwin, Inc. and Corr Company for the year ended
December 31, 2013, prior to Goodwin’s acquisition business combination transaction
regarding Corr, follow (in thousands):
On December 31, 2013, Goodwin issued $600 in debt and 30 shares of its $10 par value
common stock to the owners of Corr to acquire all of the outstanding shares of that
company. Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock
issuance costs. Corr’s equipment was actually worth $1,400 but its buildings were only
valued at $560.
Compute the consolidated equipment (net) account at December 31, 2013.
A.
$2,100.
B.
$3,500.
C.
$3,300.
D.
$3,000.
E.
$3,200.
$2,100 BV + $1,400 FV = $3,500
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
38.
The financial statements for Goodwin, Inc. and Corr Company for the year ended
December 31, 2013, prior to Goodwin’s acquisition business combination transaction
regarding Corr, follow (in thousands):
On December 31, 2013, Goodwin issued $600 in debt and 30 shares of its $10 par value
common stock to the owners of Corr to acquire all of the outstanding shares of that
company. Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock
issuance costs. Corr’s equipment was actually worth $1,400 but its buildings were only
valued at $560.
Compute the consideration transferred for this acquisition at December 31, 2013.
A.
$900.
B.
$1,165.
C.
$1,200.